RBC Letter

Farming is everyone's business,
not only because it furnishes our daily food but because it
is the base of so many industries and so much of Canada's
trade and commerce.

Agriculture is our most important single industry. It employs
a quarter of our gainfully occupied population. The economic
welfare of the whole nation is affected by changes in farm
income and purchasing power.

City people have quaint ideas about farm life. They see
a farmer living in his own house, without rent to pay, growing
a big part of his own food. He is free to work as and when
he pleases. He need never fear unemployment.

These things are true, but the impression turns out differently
if we follow a successful farmer around the clock. Success
in farming is the result of clear thinking and skilful management,
and a great deal of hard work.

The man on the farm is the force that welds land and equipment
into a producing unit. He plans his crop rotations, attends
to the fertility of his soil, balances his livestock programme
with the feed available, controls expenses, uses labour and
machinery efficiently, and finds his market.

That is a complex business. The changes wrought in farming
during even one lifetime are astounding. Today's farmer must
be able to use and maintain power machinery, hire and supervise
labour, obtain and manage large amounts of capital, control
expenses, attain a balance between all phases of his farm's
business, and apply his own physical energy as his fathers
did.

Not all this is to be learned in books. Farming is an ancient
occupation. It has gathered round it a vast fund of wisdom
and skill, transmitted from father to son on the thin air
of oral tradition or of living example. We must not underestimate
the worth and power of this body of rural lore and technique.

There are probably no instruments known to any craft which
are more perfect in their adaptation, with more fine points
upon which success or failure depend, than the simple implements
of modern farming. The shaping of the mouldboard of a plough
so as to give maximum efficiency with minimum effort is a
problem of the utmost nicety.

The Farmer's Market

Just as agriculture is at the base of all other prosperity,
so agriculture depends upon all other industry for its state
of wellbeing. Only in an environment of high level employment,
abundant production, and high purchasing power can farming
be a profitable pursuit.

Because of limitations in the home market, Canadian farmers
are dependent on export trade. Any attempt to keep their income
at a high level requires maintaining exports at 20 to 40 per
cent of their production. Farmers have high interest not only
in the normal functioning of the Canadian economy, but also
in an expanding world economy, and therefore in world peace.

This introduces one of he most provocative of problems.
It is easy to say "The more we buy from other countries, the
more they can buy from us." But what we sell them depends
upon the bargains we offer. Our prices must be in line with
those available in the world at large, and this compels us
to keep costs as low as possible if we are to realize a satisfactory
net income.

There are many countries where, if they had the purchasing
power, Canadian wheat and meat and fruit could be used to
advantage. To develop them into markets is the aim of sections
of the United Nations, of President Truman's point four programme,
and of the gifts and loans made so munificently by Canada.

Canada's Farms

Agriculture was not Canada's leading economic activity until
comparatively recent times. Vernon C. Fowke, Associate Professor
of Economics at the University of Saskatchewan, said in his
book entitled Canadian Agricultural Policy, the Historical
Pattern: "Until perhaps a hundred years ago it was not
agricultural prospects which attracted newcomers to venture
energies and resources in the New World....Agriculture, it
might be said, was not indigenous to Canada; it was established
and expanded only under conditions of extreme and prolonged
difficulty."

The profitable and attractive opportunities in Canada were
of other sorts, generally commercial. But when the last census
was taken it showed that 39 per cent of Canadian manufacturing
plants were engaged in working upon Canadian farm products.
In turn, the farms of Canada represent a vast potential market
for industrial products. Estimates based on the census indicate
that practically half the Canadian market for products of
city manufacture is provided by farmers.

Where are these farms, and who own them? The following table,
compiled at the time of the census, tells the story:

Occupied Farms and Land Tenure in Canada in Percentages
by Provinces

Number of Occupied Farms

Per Cent owned

Per Cent rented

Per cent part owned part
rented

Canada

732,715

75

13

11

P.E.I.

12,234

92

2

5

Nova Scotia

32,963

92

3

4

New Brunswick

31,881

92

3

4

Quebec

164,629

93

4

3

Ontario

178,169

79

12

9

Manitoba

58,022

66

19

14

Saskatchewan

138,703

53

24

22

Alberta

99,716

62

20

17

British Columbia

26,372

80

11

8

Farm Finances

Good farmers have little difficulty, today, with their financing.
Proper financing, both from the long and shortterm
credit standpoints, can mean a great deal in success or failure,
but sources of credit are plentiful. Canadian chartered banks
provide a large share of the shortterm credit used by
farmers. Their local branch managers know the financial and
personal rating of the local farmers, and advances are readily
arranged.

In talking of credit, it is well to emphasize the value
of a true appraisal by the farmer of his needs, his ability
to repay, and the most economical source of credit to meet
his situation. Too easy credit should be avoided if it means
taking excessive risks, and the farmer should consult his
banker, or someone else equally familiar with the broad agricultural
picture as well as with local conditions, before making decisions.

Credit needs to be used judiciously. Credit for productive
purposes is justified when after careful and conservative
calculation the prospective returns from the venture amount
to more than the cost. As was pointed out in the C.B.C. Summer
Fallow programme, in a play entitled Country Banker,
the Canadian banks, while eager to advance credit for farm
expansion and development, are equally keen to save farmers
from embarking on expenditures which would end in grief for
both lender and borrower.

It should be mentioned in this regard that the census of
1946 in the prairie provinces showed 81 percent less indebtedness
covered by liens than ten years before, and the number of
farms reporting debt covered by mortgages and agreements of
sale dropped from 120,318 to 66,846.

This, of course, reflects an easier farm income period.
The prosperity and wellbeing of farmers do not depend
on agriculture having any given proportion of the national
income, but on achieving and maintaining adequate income per
worker.

It is impossible to give a figure which will represent the
net income of a farmer, because it varies with every community
and farm, and year by year. The estimates, however, are interesting.

Cash income from the sale of farm products, the most important
income component, represents the gross returns from all products
sold off farms, valued at prices received by the farmers.
This figure reached an alltime high in 1948, and receded
a trifle in 1949 to $2,457 million. As to how the income was
made up, here are interesting details from the Statistical
Summary of the Bank of Canada.

Cash Income from the Sale of Farm Products

(Millions of Dollars)

Year

Field Crops

Livestock

Dairy Products Poultry & Eggs

All Other

Total

1930

274

158

165

35

632

1940

291

245

183

47

766

1949

1056

762

500

139

2457

Mechanization

The development of laboursaving machinery has been
a big feature of Canadian agriculture. Anyone looking around
the average Canadian farm today is amazed when he thinks that
it was only in 1837 that John Deere made his first steel plough
from an old saw blade. Canadian farmers certainly are not
like the natives on a South American estate who allowed a
valuable steel cart to rust in idleness because it did not
squeak like their old wooden carts.

At the halfway mark of the 20th century, a survey
of the technological changes in farm life seems to indicate
that farm people have benefitted. The effects have not all
been good, but the levels of living for farm people have improved
most in the areas where the greatest changes have occurred.

In 1901 the total value of machinery on Canadian farms was
$108,665,502, an average per farm of $213 and per acre $1.71.
In twenty years the total had grown to $665,180,416, the value
per farm had increased to $935, and the value per acre was
$4.72. In the ten years prior to 1948 Canadian farmers spent
more than $740 million on machinery and equipment; in the
one year, 1948, they spent $237 per farm, on the average.

The transformation in Canada's agriculture by these successive
changes from hand power to horse power and then to machine
power goes far beyond mere labour saving. It has altered the
Canadian farm from a place where diversified production was
pursued for home use to specialized production for the market.

Efficient use of machinery is of the greatest importance
in keeping down costs and thereby increasing profit. It is
just as wasteful to use unnecessary machinery as it is to
have inadequate machinery. It is wasteful, too, when machinery
is not properly protected from the weather. The cost of protection
is discussed by H. R. Hare, Agricultural Adviser, the National
Employment Service, in his book Farm Business Management.
Mr. Hare estimates that in the damp climate of Eastern Canada
it will pay to spend as much as 20 per cent of the value of
the farm machinery in constructing a building for its shelter,
while in the drier atmosphere of the Prairie Provinces no
more than 10 per cent of the machinery value should be so
expended.

Family Farms

Farming in Canada is, for the most part, of the family farm
kind. All people on the farm contribute to the general programme,
and all economic and social activities are shared in common.

This ideal of production for a common family purpose, of
building a family and perpetuating a prosperous, productive
estate, is one of the greatest factors in adding dignity to
family life. No artificial methods are needed to bring together
the members of a family farm. In no other sphere of life do
we find the sexes quite as indispensable for each other's
well being as they prove in the country.

One farmer's wife said: "An important advantage is that
farm life makes it easier for the wife's and husband's interests
to be the same. Everything is to be cared for and planned
together and at home instead of outside the home. Thus a man
is not so apt to become a meal, clothing and shelter coupon
for the wife, and she to become just cook and housekeeper."

Farmers are, as a class, more independent than any other
large class. The vast majority of them are their own employers,
heads of independent enterprises.

Big or Small Farm?

What size of farm is required to permit an effective use
of the labour of the farm family and to provide a minimum
acceptable standard of living? There are only general guides.
Professor David L. MacFarlane, Macdonald College, comments
in a Queen's Quarterly article on the difficulty of
securing an economic combination of land, labour and machinery.
He says: "Without important exceptions some 85 per cent of
our farms are too small or their operators too limited in
capital to reach the degree of mechanization called for by
economic standards."

Acreage is not a final test of efficient production. More
capital may be invested and more labour applied on ten acres
intensively farmed than upon a thousand acres extensively
farmed, with equally good income returns. The available evidence
seems to show that familyoperated farms which are large
enough to utilize laboursaving equipment and other improved
techniques usually can compete effectively, so far as providing
a good living level goes, with largescale units.

No article issued by this Bank, which has always had at
heart the wise use of Canada's natural resources, would be
complete without mention of conservation.

All revenue from farm operation is obtained through the
medium of crops and livestock, and soil is the basic resource
in their production. Income yield depends to a large extent
upon land being used for purposes for which it is best suited.

Rough and stony land may break the heart and exhaust the
bank account of the man who tries to till it for crops, but
may return good earnings when used for pasture or woodlots.
Other land may produce spindly plants, or plants deficient
in nutrient qualities, because the minerals have been exhausted
by repeated cropping or by erosion. This land can be brought
back to productivity by carting out a longterm plan
of fertilization, crop rotation, and rational cultivation.
Farmers have realized that increased yields can be obtained
by the use of fertilizers. Sales of fertilizer materials and
mixtures for use in Canada rose from 170,000 tons in 1927
to 742,000 tons in 1949.

Making Work Easier

However it is approached, farm work is hard work. The farmer
owes it to himself to make it as easy and as efficient as
possible.

The general layout of the farm can be such as to save both
land and labour, and at the same time to increase the very
desirable margin between cost and gross income.

Before plunging deeply into expenditure for laboursaving
devices, the farmer should carefully calculate their cost
and the savings he hopes they will produce. Once purchased,
the depreciation, repairs and insurance become annual charges.

One of the greatest causes of waste energy is the lack of
proper buildings and the bad arrangement of buildings. The
doing of chores is a daily job, and a few steps a day taken
unnecessarily adds up to a lot of miles in a year. Just an
unnecessary trip of 10 rods and return across the farmstead
once a day will result in the loss of one and a haft day's
time in a year.

Farm magazines and books provide many suggestions for a
farm's efficiency. No man can take a readymade formula and
apply it to his own farm, but the general suggestions may
be adapted and tailored to fit particular circumstances.

Anyone interested in literature dealing with farm operation
should write to his provincial department of agriculture or
to the federal authorities.

Applying Science

Science is at hand, too, to help the farmer. All farm people,
and the economy generally, will benefit by the discoveries
of scientists and the technological developments which flow
from them.

The farmer's business has to do with the manipulation of
nature, and nature brooks no radical departure from its accustomed
ways: it cannot be tricked or deluded. In olden times, farmers
were guided by superstition: today the questions in farming
are answered by men who have wrought out the problems by research
in the agricultural colleges and experiment stations. There
are in operation 29 experimental farms and stations, 64 substations,
and 9 branch laboratories. The colleges of agriculture have
agencies through which every type of farm information is available.
There are county and district agricultural representatives
specially trained in the agriculture that is typical of the
locality in which they serve.

Farm management involves the joining together of principles
and facts from many sources. It requires an understanding
of basic economics, of several natural sciences, and of applied
sciences such as agronomy and animal husbandry. The farmer
needs to adjust his farm operations to the varying conditions
of soil and climate; he must have in mind the requirements
of the market, his costs, and the development of his farm
to meet the needs of next year.

There are no blueprints for this kind of efficient management.
Keen thinking based on sound information, and planning based
on the farm's resources and limitations frankly faced m these
are the essentials of good management.

How they are applied is a personal matter with the individual
farmer. One man may be content to accept a low return, with
its consequent low living standard; many more will wish to
apply the knowledge freely available to them in an effort
to raise their family living level at once, and bequeath to
their successors farms which have improved under their administration.

Records are Helpful

One of the best aids to management is a set of good records.
Incomplete accounting in urban business is charged with being
the cause of more failures than any other business shortcoming,
and surely we may attribute an equal proportion of farm failures
and of mediocre success to the same cause.

There is no simple system applicable to all farms, because
every farmer has his own ideas of work, of help and of ambition.
The system of greatest usefulness is the one that tells the
individual farmer the most about his business without making
too great demands upon his time. Such a record will show him
not only the total results of his year's farming, but the
part contributed to his profit or loss by each enterprise.

There are special forms to assist farmers in preparation
of a farm budget, available free of charge from the Economics
Division, Department of Agriculture, Ottawa. A Farmers'
Account Book, providing a simple and practical method
of keeping farm records, is published for free distribution
by The Royal Bank of Canada. It may be obtained on request
to a local branch, or from head office. A Milk Weight Record
book is offered by the Bank to keepers of dairy herds.
Booklets on woodlots and conservation may also be had without
charge.

The Farm Way of Life

One's standard of living can be what one wishes to make
it: the problem then is to reach it. To most people it will
seem as if the farmer has greater chance of reaching his standard
than have most city dwellers. Many of the things for which
city folk yearn are commonplace to the farmer, not as superficialities,
but as the realities of everyday living.

Nature, with which the farm family has so close contact,
is straightforward and sincere. There are, consequently,
fewer artificialities in the rural community. Associations
are highly personal, so that pretense is practically impossible.
The farmer is accustomed to saying what he thinks and meaning
what he says.

But the farm cannot hold its young people unless community
life can be made attractive, social life agreeable, and income
comparable with what would be earned in cities. There needs
to be opportunity, too, for intellectual and aesthetic enjoyment,
for health services and education.

Much has been done in the past quarter century by the introduction
of rural mail delivery, telephones, automobiles and radios
to overcome the isolation of farm dwellers. The church, as
always, has been to the forefront in building up a wholesome
social life and fostering mutual helpfulness, and the school
has become, in thousands of communities, the centre of planning
and improvement.

It is only as farm people themselves catch a vision of a
better community, and command the many agencies at their disposal
to make it a reality, that farm life will roach its highest
peak of happiness. There is no social legislation that can
do it for them. The achievement must come from within the
community itself.

Farming is a way of life, as well as being a business. Many
farm homes, though having little of a physical nature to make
them attractive, are centres where young and old enjoy all
that is most precious in family living. There is a compulsion
of nobility upon the man in close touch with nature.

There are hardships. Like pioneering, farming has always
required unusual amounts of industry, thrift and stamina.
The people are misled who think that because they have read
of one hen that laid 300 eggs in a year, and of one cow that
produced 10,000 quarts of milk in a year, therefore farming
is a soft job. Life on a farm is a longdrawn question
mark between one crop and the next. There are always new anxieties.
The farmer must plan for next year before this year's crop
is harvested, and for the year after, and the year after that.
He must do painstaking work today with no prospect of seeing
a tangible result for years to come.

Farming is not static, but sprightly. The farmer is a man
versatile and resourceful, able to decide what is to be done
next, out of a great pressure of duties. His work has more
variety, more room for initiative and selfdirection
than the work of a city artisan or foreman. All this is accompanied
by an ancient and singleeyed simplicity of purpose.

There is as much dignity in tilling a field as in writing
a poem; the farmer, more than all others on earth, takes the
soil, the winds, the clouds and the sunbeams into partnership.